SOYO Soyo Group Inc (CE)

Dutton Associates initiates coverage of Soyo Group (OTCBB:SOYO) with a Strong Speculative Buy rating and a $2.20 price target. The 20-page report by Dutton senior analyst Paul J. Resnik, CFA is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. Soyo Group Inc. has proven its ability to source and successfully distribute quality consumer electronics products using its own brand names, Soyo and Prive. Its products are now sold in major retailers throughout the United States and Canada. We estimate that the Company achieved a 75% gain in revenues in 2007 and moved from marginal profitability to comfortably in the black. On this basis alone, the shares would appear reasonably valued. However, the Company is now embarking on a new venture that we believe will support sustainable growth, profitability, and greater visibility for the Company. Starting in 2008, Soyo will be distributing consumer electronics under the Honeywell brand name. We believe this licensing agreement will open top tier consumer product markets to the Company. We estimate the Company earned fully diluted earnings per share of $0.07 in 2007 (versus $0.01 in 2006) and project EPS of $0.13 in 2008. At the current price, the shares are trading at just 8 times our 2008 estimate. We believe that the Company�s potential to achieve rapid growth in coming years warrants a much higher price/earnings multiple for the shares. Based on valuations in Soyo�s industries, we believe a 17x multiple is a reasonable, if not conservative, valuation for the shares. On this basis we generate a price target of $2.20 based on our 2008 earnings estimate. This represents a better than 70% gain in the price from current levels. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 senior analysts are primarily CFAs, and have expertise in many industries. Dutton & Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $35,000 from the Company for 4 Research Reports with coverage commencing on 1/07/2008. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.